‘With GST, contract logistics business will get a boost’

The Chief Operating Officer of Allcargo Logistics Ltd, Prakash Tulsiani is bullish on the implementation of the Goods and Services Tax (GST) regime. He hopesthe tax will bring in a new paradigm for the logistics company to operate. Excerpts from an interview.

What will be the impact of GST on the logistics business?

If you see the whole country from a business angle, it emerges that every State has its own local taxation. Every state has its own border and every time a truck passes it, taxes have to be paid. For that truck to pass the border post a whole number of documents are required, which leads to delays and the assets (truck) remain underutilised.

With GST coming in, the whole of the country will become one big business unit, the artificial divisions will vanish.

In the GST regime, the location of warehouses would be governed by proximity to the manufacturing facilities and not by State government taxes. Earlier manufacturers’ thinking was governed by taxes but after GST, logistics will get prominence in the entire supply chain.

Which of your company’s business are expected grow with GST system being implemented in the country?

With the implementation of the GST, the contract logistics business will get a boost. Today, due to various state taxes, the manufacturing companies need to have a logistics set up of their own. But, with GST being implemented, cargo handling will move to companies such as Avvashya CCI, which is a joint venture company of Allcargo. It will offer end to end logistics solutions, leaving the manufacturers to focus on their core business of manufacturing goods.

Our company would be able to handle everything from labelling, warehousing to the final distribution of goods. While the goods are being held at warehouses, value added services such as goods inspection, quality check and even repackaging can be done.

What kind of investments your company is planning in the next three years?

We want to remain an asset light company. Our Container Freight Station (CFS) business is present in ports, which handle about 80 per cent of the container volumes. We are the largest player in this segment, and therefore, now we want to expand in Inland Container Depot (ICD) business.

Allcargo is already present in ICDs at Kheda and Dadri in North India and looking for more such opportunities in this space. The company is also looking at investing ₹500 crore over the next five years in a logistics park at Jhajjar, which is close to Gurgaon. It will handle everything from domestic to Exim cargo to even liquid bulk cargo.